Regionalization and Globalization: are Regional Blocs and Regional Agreements Obstacles to Globalization?

Résumé du document

Countries open their borders, that means lower their tariffs and allow foreign investors to come in. As a result, a global market emerges. Nevertheless, we can clearly assert that this global market, without any border does not exist yet. On the contrary many regional blocs are being formed. The North American Free Trade Agreement and the European Union are examples of huge and powerful regional trading blocs. They are ambiguous objects in-between liberalization and protection.

Extraits

[...] Regionalization, an obstacle to the global trading market? There is no denying that there is a gulf between multilateralism's reliance on non-discriminatory trade policies and regionalism's reliance on discriminatory trade policies (DeRosa D., 1998). That is the main reason that makes some economists argue that regional blocs do not encourage free trade. The American economist Jagdish Baghwati (2008), advocate of free trade, argues that FTAs are termites in the global trading system since they consist in discriminatory practices. The world trading system is at risk again (as in the1930's) because of protectionism. [...]

[...] Frankel, J.A. (1997). Chapter 1 Introduction to Regional Trading Arrangements and Chapter 5 Estimated effects of trading blocs. In Regional Trading Blocs in the World Economic System (p. 1-17 and pp.77-113). Peterson Institute for Interational Economics. Electronic sources Baghwati, J., David Greenaway, D., & Panagariya, A. (July 1998). Trading Preferentially: Theory and Policy. The Economic Journal, 108, 1128- 1148. Retrieved March from http://ideas.repec.org/a/ecj/econjl/v108y1998i449p1128-48.html DeRosa, D.A. (1998). Regional Integration Arrangements: Static Economic Theory, Quantitative Findings, and Policy Guidelines. [...]

[...] But a total harmonization of ROOs is unlikely to happen. Another solution which could be applied the value-added tariffs, and to allow for full cumulation. This is a proposal first made by Lloyd (1993, cited by Gasiorek et al., 2007). The principle is that the tariff is levied in proportion to the amount of non-originating inputs. For example suppose the EU signs a PTA with country where country B uses non- originating intermediates which represent 60% of the final price of the good. [...]

[...] Lastly, it asserts that to have a transitory function, regionalization must not be excessive, and provides recommendations to make regional agreements compatible with the building of a global economy through liberalization. (IV). I. Regionalization, regional agreements, and regional blocs: theory and current reality First of all, we must indicate that in this paper, which aims at determining if agreements are positive “stepping stones” towards a greater multilateral and global market or negative “stumbling blocks” (Gasiorek et al., 2007), we assume that global trade liberalization is desirable (the reader may refer to Beaulieu to understand the benefits of trade liberalization). [...]

[...] The Regional Trade Agreements Committee looks at the broader implications of the agreements for the multilateral trading system and the relationship between them. IV. Recommendations to prevent an “excessive regionalization” that would not be compatible with the building of a global economy A last crucial observation has to be made: regionalization is a step towards a global system only if it is not excessive (Frankel, 1997). Some conditions have to be met to build efficient regional blocs or agreements that are able to achieve their transitory function. [...]